Several favorable fundamental developments helped the crypto-market in its recovery after the steep correction of the previous week. New leaders pushed the market value back to $90 billion, after a $30 billion drop, as Ethereum, Dash, and Ethereum Classic showed relative strength, while Bitcoin, Litecoin, and Ripple are still well off their respective highs. The biggest Chinese cryptocurrency exchanges reopened withdrawals, one of the biggest Japanese forex brokerages started offering Bitcoin trading, while the Russian leadership is considering a “national” cryptocurrency.

2. Lots at stake at the UK Election Under the Shadow of Terror

Yesterday’s tragic terror attack in London could have a major effect on the British snap elections, especially after the narrowing of the difference between the Conservative Party and the Labour Party. The campaign has been officially suspended following the attacks, while both parties have accused the other of “politicizing” the attacks. PM Theresa May and the Conservative Party are more likely to benefit from the current sentiment, and the reaction by the Pound could actually be surprisingly positive thanks to that.

3. The OPEC Under Pressure: Oil Supply Creeps Higher

The crucial commodity remained in a declining trend throughout the week, falling as low as $47 per barrel from the pre-OPEC-meeting highs near $52. The relentlessly rising US production numbers keep a lid on the price of crude oil, and the trend is likely to continue in the coming months, as break-even levels for shale-oil continue to decline. As the effectiveness of the cartel’s production cut is questionable, a sustained rally in oil is unlikely.

4. Will Negative Summer Seasonality Kick-In for Stocks?

“Sell in May and go away!” This is one of the oldest “common knowledge” trading strategy regarding US stocks, and a little bit surprisingly, it has a lot of merit to it. As you can see in the chart above, June is one of the worst months of the year and, on average, the S&P 500 hasn’t gone anywhere in the past 30 years from May to December. That said, outlier years are not uncommon, so the summer could bring more gains, but, given the internal weakness in the markets, investors should be cautious, especially after the huge “Trump-Rally” in the US since the election in November.

5. Will Gold Continue above $1300?

Gold broke out from the trading range between $1260 and $1275 following the lackluster US Employment Report, and continued its short-term uptrend, on its way to the $1300 level. The London attacks, combined with the disappointing economic numbers, could fuel the next leg higher in the precious metal, with the next Federal Reserve meeting coming up in 10 days. Interest rate expectations have dipped before the central bank’s decision, and that is usually bullish for gold. The ECB will announce its rate decision on Thursday, and that could also move the price of the metal.

Gold, 4-Hour Chart Analysis

Key Economic Releases Next Week

Day

Country

Release

Expected

Previous

Monday

UK

Services PMI

55.1

55.8

Monday

US

ISM Non-Manufacturing PMI

57.3

57.5

Monday

US

Factory Orders

-0.20%

0.20%

Tuesday

AUSTRALIA

RBA Rate Decision

1.50%

1.50%

Tuesday

AUSTRALIA

RBA Statement

–

–

Tuesday

CANADA

Ivey PMI

62

62.4

Wednesday

AUSTRALIA

GDP Growth

0.30%

1.10%

Wednesday

UK

Halifax HPI

-0.20%

-0.10%

Wednesday

CANADA

Building Permits

–

-5.80%

Wednesday

US

Crude Oil Inventories

–

-6.4 mill

Thursday

JAPAN

Final GDP Growth

0.60%

0.50%

Thursday

AUSTRALIA

Trade Balance

1.99 bill

3.11 bill

Thursday

CHINA

Trade Balance

336 bill

262 bill

Thursday

EUROZONE

ECB Interest Rate Decision

0

0

Thursday

EUROZONE

ECB Monetary Statement

–

–

Thursday

CANADA

NHPI Index

0.30%

0.20%

Thursday

US

Initial Jobless Claims

241,000

248,000

Friday

CHINA

CPI Index

1.50%

1.20%

Friday

CHINA

PPI Index

5.70%

6.40%

Friday

UK

Manufacturing Production

0.80%

-0.60%

Friday

UK

Goods Trade Balance

-12.0 bill

-13.4 bill

Friday

CANADA

Unemployment Rate

6.6%

6.5%

Friday

CANADA

Employment Change

11,500

3,200

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 96 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.

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Daily Analysis: Dollar Rebounds as Stocks Struggle at Key Levels

Friday Market Recap

Asset

Current Value

Daily Change

S&P 500

2731

-0.08 %

DAX

12,451

0.86%

WTI Crude Oil

61.64

0.31%

GOLD

1351.00

-0.32%

Bitcoin

10030

-0.52%

EUR/USD

1.2405

-0.78%

The main US stock indices entered a crucial zone during the overnight session that we have been monitoring throughout the last two weeks, as the line-in-the-sand zone for the correction. Despite that, the question regarding the fate of the move has been postponed for next week, as the S&P 500 and the Dow failed to clearly rally above the zone, while the Nasdaq showed relative weakness after leading the market higher during the bounce.

We are still leaning on the side of the bears regarding the short-term outcome, as the technical damage of the Volatility-Armageddon seems bigger than what a straight-line recovery would suggest. That said, the fundamental news was great today (not counting the latest developments in the Russia-Gate), as the US housing market sent positive signals amid the rising yields, while the UOM Consumer Sentiment Index also beat expectations.

On an interesting note, the rise in yields paused, despite the positive economic news, and in this perverse world that led to a strong rebound in the Dollar, right after the new multi-year highs in the EUR/USD pair during the overnight session.

EUR/USD, 4-Hour Chart Analysis

The Euros weakness helped equities of the old continent is finally showing some relative strength, and the same goes for Japan, as the oversold readings in the USD/JPY pair that we noted also led to a rebound, back above the 106 level. While the bounce slightly helped the negatively diverging benchmarks, the clear technical weakness remains another bearish sign for the coming weeks.

DAX, 4-Hour Chart Analysis

The Dollar’s bounce pushed the price of gold lower too after the encouraging rally, but the Shiny Metal remains just a tad below its rally high, which is commendable, given the improving risk-sentiment throughout the week, even as another short-term correction is possible here. Crude oil enjoyed another positive day, although it remains well below its recent highs, just as the commodity-related risk-on currencies, where we already noted the relative weakness yesterday. That also adds to the cautious outlook for equities even in the face of the 5/5 positive days this week.

Gold, 4-Hour Chart Analysis

Cryptocurrencies

The crypto market continued to show robustness amid the hectic trends in traditional assets, and today’s meager correction adds to the bullish signs that emerged last week and remained with investors throughout this week. While not everything is rosy, with still several coins in dominant downtrends, including Bitcoin and Ethereum, there is clear leadership behind the rally, and if the coming short-term pullbacks remain in-line with today’s move, bulls should have their hopes up

BTC/USD, 4-Hour Chart Analysis

What would change the bullish posture is a return to the “everything moves together with high volatility and bearish volume” regime of the preceding steep sell-off, but, for now, that seems unlikely, and a quiet consolidation this weekend would be just what the doctor ordered for the segment.

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 96 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.

The crypto segment is trading in a short-term correction, or rather consolidation pattern today, as bullish signs continue to dominate the landscape, despite the pause in the surge. The largest coins are mostly down by a few percent from the overnight highs, but the momentum of the move is not substantial, for now, and several currencies are showing relative strength.

Bitcoin is hovering around the key $10,000 level after hitting an overnight high above $10,300, with the short-term MACD indicator showing the possibility of a short-term correction. With that in mind, investors and traders should wait for a dip before entering new positions, even as further gains are possible. The next key resistance level is at $11,300 with further strong levels ahead at $13,000, and $14,250, while the line-in-the-sand support is still found between $9000 and $9200.

Bitcoin Cash, Litecoin, NEO, and Ethereum Classic are all among the stronger coins, while Ethereum is also holding up well amid the weak pullback in BTC. The price of the ETH token has been very stable today after a period of underperformance, and it is still trading well below the next resistance level at $1000, but also significantly above the key support near $850.

We still expect the currency to consolidate more before a clear move out of the downtrend, but investors could still use the dips to boost their holdings. Further support levels are found at $740, $625, and $575, with resistance above $1000 ahead at $1175.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 96 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.

Traders might be in for another exciting Friday session in the US, as although the coming Chinese year of the dog means that liquidity might be lower than usual, the aftermath of last week’s crash is in a crucial phase. The surge in cryptocurrencies also halted a bit, and all major asset classes look ripe for an action-packed day, including bonds, commodities, and fiat currencies.

The key levels in the major US indices that we have been monitoring ever since the crash are now in play, with the Nasdaq actually being already above the corresponding resistance zone. That said, apart from the tech benchmark, the Dow and the S&P 500 are hovering right near the “hot” zone, and before a clear move above it, bears could still have their moment, with a possible re-test or even new correction lows in the coming weeks.

As we noted previously, it’s unlikely that the bull market is dead just yet, despite the fact that we agree with Peter Toogood (really) that “this market is nuts…” from a valuation perspective, but short-term, these are the levels where the bounce should fail, in theory, that is.

At this point, even bulls should take a step back, and wait for the next pullback before jumping in, as the short-term indicators are stretched, while bearish traders could be looking for entry points today, and long-term investors could just enjoy the show.

Heavy Trading in Forex Markets

Although equities and Treasuries are mostly in the headlines, the most important forex pairs are also very active, with the Euro, the Dollar, and the Yen all being pushed around by the quick repositioning of the big players.

EUR/USD, 4-Hour Chart Analysis

This creates a great day-trading environment, with clear, significant swings in both directions, within the strong trends. The Dollar is generally trading lower since the bounce started, and the EUR/USD pair already managed to reach a new 40-month high during the Asian session, before turning lower in European trading.

USD/JPY, 4-Hour Chart Analysis

The USD/JPY pair traded with a 105 handle today, again a more than 1-year low, and the trend looks clear, even as the short-term picture is oversold. Gold might also be preparing for a new multi-year high, so everything looks set for more fireworks in currencies too. Stay tuned.

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 96 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.

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